Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Pursuit of disgorgement undermines FTC’s mission, Ohlhausen says, (Apr 20, 2016)

By Greg Hammond, J.D.

The FTC’s new enthusiasm for monetary equitable relief has “troubling ramifications,” Commissioner Maureen K. Ohlhausen commented today at Dechert LLP’s 2016 New York Annual Antitrust Spring Seminar. In her prepared remarks, entitled “Dollars, Doctrine, and Damage Control: How Disgorgement Affects the FTC’s Antitrust Mission,” Commissioner Ohlhausen calls on the FTC to reinstate the principles adopted by its 2003 Policy Statement on Monetary Equitable Remedies in Competition Cases.

According to Ohlhausen, the FTC announced in its 2003 Policy Statement that it would not ordinarily seek disgorgement absent a clear violation of the antitrust laws. The FTC, however, discarded the policy statement in 2012, resulting in a “dramatic uptick in the agency’s pursuit of monetary equitable relief.”

The commissioner referred to her concurring statement in Cephalon, commenting that “the incentive to pursue monetary remedies more frequently, particularly in other cases without a clear violation, may cause the Commission to neglect its special mission to develop the antitrust laws through Part III litigation and other unique tools. That concern is only heightened now that we are counting disgorgement in the billions of dollars.”

Since the FTC withdrew its 2003 Policy Statement, the agency has sought disgorgement four times, which was as many times as the FTC pursued relief in the prior 20 years, Ohlhausen noted. While the commissioner supported a consent order providing for disgorgement of $1.2 billion in Cephalon, the remaining three instances of disgorgement were “not as well founded,” she said. In particular, Ohlhausen dissented from the consent order in Cardinal Health, in which the company agreed to pay nearly $27 million in disgorgement. She pointed out that the principles embedded in the 2003 Policy Statement counseled heavily against disgorgement because there was no clear antitrust violation and no reasonable basis for calculating the amount of a remedial payment. “To my mind, Cardinal Health exemplifies the lax disgorgement standard that reigns after the FTC withdrew its policy statement.”

The pursuit of disgorgement has undermined the FTC’s antitrust mission, Ohlhausen further proclaimed. In two pay-for-delay actions, AbbVie and Endo, the Commission filed in federal court and sought disgorgement. However, “The Part III process would have allowed the Commission to weigh in expeditiously, perhaps stemming the plethora of amicus briefs that we must file as courts work through post-Actavis pay-for-delay matters,” Ohlhausen said.

“I call on the FTC to reinstate the principles adopted by the 2003 statement on monetary equitable relief,” she stated. “If today’s Commission cannot embrace those norms, at the very least it should explain the principles that guide its discretion in pursuing such powerful remedies. Today’s status quo is unacceptable, not least when it leads the FTC to forgo its special mission to develop complex antitrust doctrines through Part III, as it has done so successfully in the past.”

News: Antitrust FederalTradeCommissionNews